I don't see any intrinsic reason that the Fed can't do stuff (e.g. create money) as fast as firms are trying to reduce costs. Central banks should be judged against perfection. Sure they will in fact make mistakes but full employment inflation and less than full employment deflation just should not happen.
I don't see any intrinsic reason that the Fed can't do stuff (e.g. create money) as fast as firms are trying to reduce costs. Central banks should be judged against perfection. Sure they will in fact make mistakes but full employment inflation and less than full employment deflation just should not happen.
The Fed could make all the money it wants, but creating demand requires getting that money into the hands of people who will spend it. We need something like the Fed, but for creating demand.
You'll probably call this cheating, bringing Keynes back in thought the side door after seeing him out the front, but, I agree, someone must decide to spend in response to the newly created credit, and who better, if private investors are skittish than States and the Federal government?
I don't see any intrinsic reason that the Fed can't do stuff (e.g. create money) as fast as firms are trying to reduce costs. Central banks should be judged against perfection. Sure they will in fact make mistakes but full employment inflation and less than full employment deflation just should not happen.
The Fed could make all the money it wants, but creating demand requires getting that money into the hands of people who will spend it. We need something like the Fed, but for creating demand.
You'll probably call this cheating, bringing Keynes back in thought the side door after seeing him out the front, but, I agree, someone must decide to spend in response to the newly created credit, and who better, if private investors are skittish than States and the Federal government?
Yes indeed!
"Mr. Keynes and the Neo Classics" :)
:-)